The Pound Sterling to Euro (GBP/EUR) exchange rate is forecast to advance to a fresh 7-year high on Thursday as economists remain jittery ahead of a European Central Bank (ECB) policy meeting which is expected to give details on the bond quantitative easing (QE) programme announced in January.
The Pound Sterling to Euro (GBP/EUR) exchange rate hit a session high of 1.3811
The Euro also tumbled against other major peers. Against the US Dollar (USD), the Euro fell to a new 11-year low as the ‘Greenback’ pushed through a key technical level and broadly shrugged off softer than expected ADP jobs data.
Traders have been offloading their Euro’s despite the publication of a number of data releases, which have suggested that the 19-member currency bloc is finally beginning to show signs of improvement. Investors are looking elsewhere for higher yields and are wary on the expectation that the US Federal Reserve could soon begin to hike interest rates.
Concerns also remain as to whether the ECB will be able to buy enough bonds to reach its target of €60 billion per month.
The ECB’s latest interest rate decision will be announced at 12:45 pm GMT and the ECB press conference will be held at 13:30 pm GMT.
Also putting pressure on the single currency was the release of German factory orders data, which showed that orders declined sharply in January.
According to the German Federal Statistical Office, orders fell by 3.9% compared with the preceding month. Economists had forecast for a decline of 1%. The report showed that demand from the Eurozone declined by 9% and domestic orders fell by 2.5%.
‘Manufacturing activity in Germany appears to remain rather subdued in contrast to the surge in domestic retail and service-sector activity. Softer demand from the US and China, especially for vehicles, may partly explain the lack of better momentum in manufacturing,’ said the senior European economist at Barclays Plc.
The Pound Sterling meanwhile received support from car sales data which showed that new car registrations were 12% higher on an annual basis if February. The rise marks the 36th month of growth, the longest run of rises on record.
Another report however showed that house prices softened slightly last month. According to Halifax, house prices fell by 0.3%, the first decline recorded since October.
Also in focus for the GBP/EUR exchange rate will be the Bank of England’s interest rate decision. Policy makers are expected to leave rates unchanged at 0.5%.
